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Financial Planning / Foolish 401(k)s


Subject:  Re: 401k investment options Date:  6/5/2013  11:24 PM
Author:  pauleckler Number:  25045 of 25618

The main reasons to participate in your employers 401k plan are 1) employers match, 2) large pretax contribution limit, 3) funds grow tax free until distribution in retirement.

If you find your investment choices unsatisfactory or expensive, you could shift funds to max your Roth IRA. But be sure to keep your 401k at least enough to get your employers match.

Investments in a taxable account and invested in the long term buy and hold style can theoretically do better than an IRA or 401k because you pay taxes only when you sell and then at capital gains rates. But as a practical matter, many end up selling due to market gyrations and paying taxes sooner than they planned. So if you are considering a taxable account, try it and see how you do before you give up on 401ks.

At your age,